In Instances of Hyperinflation, the Delays Involved in Collecting Taxes

question 107

Multiple Choice

In instances of hyperinflation, the delays involved in collecting taxes often result in:

• A) decreased real government tax revenue.
• B) large capital gains for creditors.
• C) higher shoeleather costs of inflation.
• D) higher ex ante real interest rates.

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Definitions:

Commercial Paper

A short-term unsecured debt instrument issued by corporations, typically for financing accounts receivable and inventories.

Simple Interest

Interest earned or paid on the original principal amount alone, without compounding.

Buyer

A person or entity that purchases goods or services.

T-bill

Treasury bill, a short-term government security with a maturity of less than one year, used to finance the national debt.